Insiders probably made the right decision selling US$681k worth of shares earlier this year as Ducommun Incorporated's (NYSE:DCO)) stock dips by 11%.

By
Simply Wall St
Published
May 21, 2022
NYSE:DCO
Source: Shutterstock

By selling US$681k worth of Ducommun Incorporated (NYSE:DCO) stock at an average sell price of US$50.53 over the last year, insiders seemed to have made the most of their holdings. After the stock price dropped 11% last week, the company's market value declined by US$63m, but insiders were able to mitigate their losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Ducommun

The Last 12 Months Of Insider Transactions At Ducommun

Over the last year, we can see that the biggest insider sale was by the Independent Director, Robert Ducommun, for US$225k worth of shares, at about US$53.25 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$40.88. So it may not shed much light on insider confidence at current levels.

Insiders in Ducommun didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:DCO Insider Trading Volume May 21st 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Ducommun Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Ducommun. In total, insiders dumped US$408k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Ducommun insiders own about US$44m worth of shares. That equates to 8.9% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Ducommun Insider Transactions Indicate?

Insiders sold Ducommun shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But it is good to see that Ducommun is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 5 warning signs for Ducommun (3 are a bit concerning!) that we believe deserve your full attention.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.